What Are the Most Important Criteria for MRO Buying?
MRO sourcing and purchasing involves the procurement of inventory which is required for a business to keep the lights on and production lines running. MRO items are not often considered high-value purchases, however, in a manufacturing environment, MRO procurement is a significant share of capital expenditures, especially over long periods.
While MRO items themselves vary in price and can seem inexpensive at times, as your number of parts becomes large and diverse, MRO purchasing can carry a large portion of your total purchasing power. An MRO item can include spare parts, consumables, safety equipment, janitorial supplies, and more. Optimized MRO procurement is essential to an efficient and timely supply chain operation.
With streamlined MRO procurement strategies, you can eliminate rogue purchases, improve repair times, consolidate suppliers, and optimize costs among a range of other benefits. In this article, we will explore 4 critical criteria to consider when MRO buying to achieve a cheaper and well-refined supply chain.
1. Prioritize MRO goals
MRO procurement is complex because the items that are classified as MRO materials are diverse and wide-ranging. Moreover, the demand and supply of each product varies, preventing the use of simple systems for classification and procurement.
As such, companies must find the sweet spot between fast– and slow–use consumables.
The first step to optimizing this process is obtaining a list of all your MRO purchases. There are two classifications for your MRO buy, specialty parts; critical manufacturing items that are required for operations and must be available at all times like batteries, and commodities; objects used for routine upkeep like floor cleaner or light bulbs.
By tracking your MRO inventory levels and subsequently separating them into appropriate categories, companies are able to plan and allocate funds for diverse MRO necessities while maintaining optimal stock levels. This also helps to lower suppliers as you will gain visibility to your MRO procurement strategies and can use that to exploit bulk discounts.
Segmenting and prioritizing MRO inventories lowers instances of unused stock and keeps your company safe from risk of downtime/missing parts. This will free up money and time to be spent on more customer-facing aspects of inventory management.
2. Invest in digital solutions
Traditional methods of MRO management are prone to error and leave your company open to risk. Analog systems that don’t rely on data-driven decision-making to predict demand are under pressure to evolve or risk extinction. There are several different technological solutions designed to optimize your MRO procurement and handling strategy.
These solutions often take the form of Computerized Maintenance Management Systems (CMMS) or Enterprise Asset Management (EAM) software which supply master data but may not provide an easily digestible format for supply chain managers to make strategic decisions. With this in mind, it’s critical to implement a solution that not only provides real insights but is also intuitive to users.
The benefits of employing technological solutions are numerous; it facilitates data collection for smart decision-making, improves procurement strategies, tracks inventory for easy location, makes inventory needs accessible, lowers and simplifies costs, and can predict future stock levels for easy stock control.
Centralization is a key component of MRO management software. It increases visibility over supply chain enterprises, allowing all employees to locate and use MRO supplies no matter the time or place. This way supply chain leaders get real-time data insights on the utilization of MRO supplies. With accurate and reliable data at hand, decision-makers can forecast demand for future productivity.
3. Ensure maximum utility
Inventory management programs and procurement strategies must be understood by all departments if their implementation is to be smooth and long-lasting. Since consolidating suppliers and introducing technological solutions to MRO sourcing involves several enterprises, widespread training is a crucial aspect of upgrading your MRO processes.
By including multiple departments in the decision-making process, leaders gain the opportunity to learn the issues their employees face with current MRO procurement and use practices. This prevents the misallocation of supplies and the purchase of unused items. Additionally, with more knowledge on hand, bulk discounts are easier to manage and procure.
Investing in tools and training regarding novel information technology solutions and programs will improve overall productivity and confidence for improved procurement and mitigated risk. Windows for training also provide time to introduce key performance indicators that will provide data to influence future procurement strategies.
To streamline and ensure an accurate MRO buying strategy, conducting an initial audit can enable decision-makers to identify places of risk and waste; then set key performance indicators that directly address these areas of weakness and redefine objectives to improve resource allocation.
4. Buy from reliable vendors
Companies often mitigate risk by offloading MRO procurement requirements to third-party vendors. These vendors can help improve MRO strategies in the short term and disseminate those improvements via easily digestible digital formats.
Supply chain leaders can employ third-party vendors to procure, transport, and supply MRO items to all required actors, however, they are often utilized to catalyze MRO procurement and lower suppliers. It frees up employee time to support auxiliary business endeavors.
MRO items are already treated as an afterthought by most companies, if it is truly something that you don’t have the resources or time to optimize, third-party support can take this stressor off your shoulders to save you money. However, it’s still important to keep up-to-date metrics around your MRO inventory so as to avoid the risk of not having the right materials on hand should an emergency occur.
Modernize your MRO buying strategy
MRO management doesn’t have to be an afterthought and a drain on resources, it can be an area of business that increases revenue and protects your company from unplanned risks.
By following these steps to optimize your MRO buying, you put yourself on an excellent path to a more strategic and efficient approach. To learn more about reducing supply chain risk through MRO optimization, download the white paper on MRO optimization today.